For this quarter’s funding analysis, let’s examine how average funding event sizes in the financial technology (fintech) sector are evolving. The graphic below shows the fintech average funding event size over time by quarter.
As the graphic demonstrates, fintech average funding event size in Q1 2019 was at $54M, which dipped by 4% from the $56M last quarter. The average funding size has been on a strong upward trend, with the average funding size last quarter around 4 times larger than it was 5 years ago. The top three funding events in Q1 2019 include a $1.3B round from Sea, a $750M round from CommonBond, and a $440M round from OakNorth.
Now that 2018 is complete, let’s see how exit activity for financial technology (fintech) compares to previous years. The graphic below shows the total annual fintech exit events over time.
As the graphic demonstrates, fintech exit activity had the highest year on record in 2018 with 89 exit events. It represents a 2% increase from the previous year’s exit activity. In addition, fintech exit activity grew at a CAGR of 41% over the past 5 years. It’ll be interesting to see if its exit activity will drop in 2019 or reach even higher levels.
With 2018 now behind us, let’s examine how funding in financial technology (fintech) compares to previous years. The graphic below shows the total annual fintech funding amounts over time.
As the graphic demonstrates, 2018 experienced the highest fintech funding on record at $41B. It represents a whopping 78% increase from the previous year’s funding. In addition, fintech funding grew at a CAGR of 61% from 2013 to 2018. We’re excited to see if its funding can reach an even higher level in the new year.
The fintech industry has seen $125B in total all time funding. Let’s analyze the investors making bets into fintech and identify the most active firms.
The graphic below shows fintech investors based on their number of investments into the sector. If an investor participates in two investment rounds in the same company, that would qualify as two investments for this graphic.
As the graphic demonstrates, 500 Startups has made the most bets in the fintech sector with 147 investments. Y Combinator follows in second place with 116 investments. Examples of companies 500 Startups invested in include Credit Karma, Finova Financial, First Circle, and Albert. It’s interesting to note that Silicon Valley Bank is on this list, as sometimes it operates as a corporate investor in this space. Let’s see which investors make their way onto this list over the next year!
We’ve previously highlighted that financial technology funding is on pace to have a record year in 2018. When we take a closer look at the categories that make up fintech, we notice that the Consumer Lending category leads in both Q3 and overall funding.
We’ll highlight this conclusion with some graphics and discussions below.
The Consumer Lending Category Leads Financial Technology In Q3 Funding
To start off, let’s review the amount of funding raised this quarter by each category within financial technology.
The above graphic highlights that the Consumer Lending category leads the sector in Q3 funding with $3.7B. Its funding is 2.5 times the funding of the next category, Business Lending at $1.5B.
Consumer Lending companies offer new ways for consumers to obtain personal loans and have credit risks assessed. They include peer-to-peer lending, micro-financing, big data analytics, and consumer credit scoring services. Some example companies are SoFi, CommonBond, Avant, and Lufax.
Let’s now investigate how the fintech categories’ funding compare with each other historically.
The Consumer Lending Category Also Leads in All-Time Funding
The graph below shows the all-time funding for different financial technology categories. The Q3 funding and growth rates of these categories are also highlighted.
As the bar graph indicates, the Consumer Lending category also leads financial technology in total funding at $33B. Payments Backend and Consumer Payments follow in the second and third place spots with $28B and $27B in total funding, respectively.
In summary, the Consumer Lending category is leading the fintech sector in both Q3 funding and all-time funding. Let’s see how the the rest of 2018 shapes up for financial technology!